Government wants to know if it can recover $1.55 billion from RIL

NEW DELHI: The government is seeking legal advice on whether it can recover $1.55 billion compensation from Reliance Industries in the gas dispute case with ONGC while arbitration proceedings are underway, people with direct knowledge of the matter said.

The oil ministry had directed Reliance in November to pay $1.55 billion, or about Rs 10,600 crore, to the government for “unjust gains” from producing natural gas that had flowed from the adjoining field of Oil and Natural Gas Corp (ONGC). Reliance initiated arbitration against the decision.

“We are seeking advice from our lawyers and the law ministry to decide if we can recover the amount while the arbitration is in progress. Once we get their views, we will take a final call,” one of the sources said.

It can take months, if not years, for the arbitration panel to complete proceedings and decide on the case. “The government has all options available to it and has not foreclosed any option. The one that will best suit the interests of government/public will be decided,” an oil ministry official said. Reliance Industries declined to comment for the story.

The government demand was based on the Justice AP Shah panel report, which concluded that Reliance had unjustly gained by producing gas that had migrated to its field off the eastern coast from adjoining ONGC fields. The report said Reliance must restore that gain to the government.

Reliance Industries has nominated Bernard Eder, a former High Court judge in the UK, to the arbitration panel while the government has named G S Singhvi, a retired Supreme Court judge, as its representative. The hearing will begin in India after the third arbitrator is decided.

RIL had previously said the government order was arbitrary as the company had carried out its activities within the boundaries of the block it operates and had abided by contractual provisions and the law.

“To save the environment and to fight climate change, my government has planned a major campaign. By 2022, we want to generate 175 GW of renewable energy. In the last three years, we have already achieved 60 GW or around one-third of this target,” he said.